“First Read” is a daily memo prepared by NBC News’ political unit, for NBC News, analyzing the morning’s political news. Please let us know what you think. Drop us a note at FirstRead@MSNBC.com.

Tuesday, May 3, 2005 | 9:15 a.m. ET
From Elizabeth Wilner, Mark Murray, Huma Zaidi and Kasie Hunt

First glance
A memo from Republican pollster David Winston circulating among GOP lawmakers on the Hill notes that "gas prices have had the effect of eating into people’s disposable income" -- but that "the larger emerging concern is that these increases... are here to stay."  Winston says, "There is a developing relationship in voters’ minds between gas prices and jobs."  And he notes that Democrats "are not offering any ideas of their own...  Democrats know how to address the issue of energy as an environmental issue, but are struggling now that it is framed as an economic issue."  Much more on gas prices below.

  1. Other political news of note
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    2. Budget deficits shrinking but set to grow after 2015
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    5. Fluke files to run in California

The President does Social Security, with an event at a Nissan plant in Canton, MS at 1:05 pm.  Backing up Bush: conservative think-tanks CATO and Heritage endorse progressive indexing, per the Washington Times, and Robert Pozen himself has a Wall Street Journal op-ed countering Democratic charges that the plan amounts to a benefit cut for middle-and upper-income workers.  Swinging both ways: new Gallup data shows that Americans are braced to suffer some pain to preserve the system, but also show a strong distaste for indexing.  Going against Bush: the usual anti-private accounts Americans United to Preserve Social Security efforts, and, possibly, the fact that the lead 527 that was promoting private accounts may now be distracted by its new foray into the effort to eliminate the filibuster.

The Fed meets today.  CNBC's Patti Domm advises to watch for their comments on the state of the economy, since energy prices choked the economy in March and April.  Americans may have some psychological and economic adjustments to make: The chief political analyst for Lehman Brothers tells First Read that gas may never drop below $2 per gallon ever again -- and that as a result, gas will be a hot issue for however long it takes for people to get used to that idea in both their heads and their wallets.

And, Schwarzenegger wields his best weapon against Democratic efforts to undermine his reform agenda: his own personal popularity.  Schwarzenegger hits all major TV markets in California today with a new ad, showing him talking to camera about his effort to limit state spending.  In the ad, he blames the Democrat-run legislature for being spendthrift with taxpayer funds, and says, "help me reform California so that we can rebuild it."  No action-hero talk.  The Los Angeles Times reports today that corporations, individuals and unions have poured $40 million into the whole shebang.  Also, new population data shows that one in eight Americans now call Schwarzenegger "Governor."

It's the economy
Kim Wallace, chief political analyst for Lehman Brothers, tells First Read that while oil may temporarily become cheaper per barrel, a dip wouldn't have much effect on gas prices -- or at least no lasting impact in places where it does show up.  In fact, Wallace suggests that gas may never drop below $2 per gallon ever again -- and that as a result, it will be a hot issue for the foreseeable future as people take some time to adjust, both psychologically and economically.  Two dollars and fifty cents per gallon will become the new benchmark, Wallace says.  He notes that there's no cause to think that the US oil supply will increase: The nation hasn't seen a new refinery built in two decades, and the current US stockpile is heavy on heavy crude which doesn't get turned into gasoline.

In other words, per Wallace, it's no longer a question of lawmakers doing anything -- there simply isn't going to be much relief.  He adds that one could argue that there aren't enough lawmakers in Washington who understand the reach of this as an economic issue -- that both Washington and the markets are under appreciating the scope of the problem.

Republican pollster David Winston would appear to agree, based on the memo he is circulating among GOP lawmakers which notes, "While gas prices have had the effect of eating into people’s disposable income, the larger emerging concern is that these increases are not short term, but are here to stay.  As a result, while voters have been positive about the consistent job growth..., they are concerned that if this is a permanent shift in prices, it could negatively impact the economy to a point that it negatively impacts job growth."  Winston says, "There is a developing relationship in voters’ minds between gas prices and jobs."

Winston names as one advantage for Republicans "for the short run" -- that "Democrats are not offering any ideas of their own...  Democrats know how to address the issue of energy as an environmental issue, but are struggling now that it is framed as an economic issue.  This has left the field to Republicans, and it represents a great opportunity."

On that note, the Wall Street Journal editorial page argues that natural gas offers a case study for how environmentalists, with "their hostility to all fossil fuels, or for that matter all energy production that isn't still a technological fantasy," are contributing to the energy problem.  The page reminds us that Alan Greenspan "has repeatedly told Congress that natural-gas bottlenecks" -- which the Journal says are mainly due to the "professional green lobby" -- "endanger the economic expansion."

Commerce Secretary Carlos Gutierrez did the Monitor breakfast yesterday and, while he didn't really get into gas prices, he did use some standard Administration rhetoric about jobs.  He began with a glowing review of the US economy, calling it "growing" and "dynamic."  "This is an administration that inherited a recession, then September 11 and then a wave of corporate scandals," Gutierrez said.  "I find it impressive... that we are where we are given what the President had to deal with."  But when asked specifically about Michigan, where dwindling manufacturing jobs have created a fragile economy, Gutierrez said the Administration is never "satisfied" with job loss, and that the issue is of "great concern" to Bush.  He also used Michigan's issues as an excuse to call for tort reform, saying that Bush wants to "tackle" medical malpractice reform next.

On outsourcing, Gutierrez said that US companies in China are "better off" taking advantage of access to the market there, and that China needs to show more "meaningful progress" in adhering to recently enacted trade regulations and laws.  When asked if China is a threat economically, Gutierrez said, "I can't think of a time when we've looked at competition as a threat...  Our history is one of confronting competition -- fighting the good fight from a business standpoint."

And he also touched on immigration and jobs, saying that if there is a "willing worker" and a "willing employer," then the two should be brought together.  He noted that Bush has said these are jobs Americans don't want.  Much more on immigration below.

The Wall Street Journal reports that certain manufacturing sectors are experiencing a "critical skills shortage" that is "forcing some companies to resurrect training programs even as overall job creation remains lackluster and economic growth slows...  While skill-strapped companies often blame schools for not providing proper skills, some executives say outsourcing jobs abroad and eliminating training programs to cut costs exacerbated the problem."

The Journal also covers a new report showing that "the manufacturing sector grew in April at the slowest pace in nearly two years," although "some economists were quick to note that the reading doesn't mean that the economy is heading for recession."

Social Security
The latest Gallup data shows that "most people are prepared to endure some pain to preserve the nation's retirement system...  Nearly two-thirds, 62%, say fixing Social Security will mean benefit cuts or tax increases.  If they had to choose, 53% would choose higher taxes, 38% lower benefits."   The poll also shows "both parties viewed skeptically on the issue...  Sixty-two percent worry that Republicans will 'go too far'...; 61% worry that Democrats 'will not go far enough.'"  Bush "gets his worst rating so far on the issue: 35% approval, 58% disapproval.  The idea he endorsed last week of 'progressive indexing'... was opposed by 54%-38%."

Progressive indexing papa Robert Pozen, in a Wall Street Journal op-ed, says the argument against his proposal, "that reductions in scheduled benefits can easily be avoided by raising payroll taxes," is "misguided."  He argues that a "combined approach would let both parties win -- Democrats would get a mix of higher taxes and progressive benefit changes, while Republicans would get personal investment accounts and constraints on benefit growth.  And the solvency of Social Security would be restored..."

The Washington Times says conservative think-tanks CATO and Heritage "have embraced President Bush's proposal" on progressive indexing.

The AP says DeLay and other conservatives are "unhappy with the Senate's cautious approach" and "want a House bill on Social Security ready as soon as possible, while Speaker Dennis Hastert prefers to wait and let the Senate act first."  But a "top Republican pollster is urging party leaders to make job and economic issues their priority, rather than Social Security."

As Bush prepares to hit another Southern state to promote his plan, new National Governors Association chair Mike Huckabee, Republican governor of Arkansas, said he's surprised that Bush's poll numbers on Social Security aren't higher, and that he was impressed with what Bush had to say when he stumped in Arkansas.  "I think the president, when people listen to him, is very effective," Huckabee told reporters at a briefing yesterday.  He also praised the President's "dogged persistence."  "He is a stubborn person... and that is one of his greatest strengths."

The Clarion-Ledger previews Bush's visit to Canton, MS today, saying he'll give about a 45-60 minute speech, then do Q&A with five employees of the plant. The article notes residents there have mixed reactions to Bush's plan.

The AP notes that Bush's stop in Mississippi today "will mark the 24th state in which he has held Social Security events since he put the issue atop his domestic agenda in his Feb. 2 State of the Union address."

The governors
Huckabee also told reporters that he plans to make health care the "driving issue" of his NGA chairmanship.  He notes that too much of the discussion revolves around spending instead of prevention.  Regarding the $10 billion cut in Medicaid that Congress recently passed in its budget agreement, Huckabee says he's disappointed that the cut came before the actual reform.  "If Congress insists on simply giving us numbers without giving us the tools and flexibility... it will have disastrous consequences in the states."  He also expresses concern about having to deal with a cut in Medicaid.  "Nothing in the world is worse than implementing a reduction of services to the neediest people of your state."

Roll Call points out that "most of" Democrats' "media coverage revolves around Congress - the filibustering of judges in the Senate, the ethics controversies in the House and the fight against Bush’s Social Security overhaul."  And, that "the intense focus on Washington carries risks for the Democrats.  Congress has become increasingly bitter and ideologically polarized, making them susceptible to Republican charges that they are reactive, obstructionist and devoid of ideas."  The story points out that the party may not be doing enough to spotlight their own governors, who seem positioned to combat that image.

Republicans contesting Washington state Gov. Christine Gregoire’s (D) 129-vote win last November “dodged a major threat to their legal challenge” yesterday, when a judge ruled that “he'll listen to their core argument for divvying up illegal votes based on statistical patterns,” the Seattle Post-Intelligencer says.  But the judge also favored Democrats in some key rulings, and “underlined the magnitude of the challenge facing the GOP.  ‘Unless an election is clearly invalid, when the people have spoken, their verdict should not be disturbed by the courts,’ [the judge] said.”

DeLay
The anticipated ethics war of dozens of charges being filed by and against members on both sides may or may not materialize, but the Christian Science Monitor notes that at "the root of the DeLay investigation" is the question of, "How many degrees of separation are appropriate between lobbyist cash and politicians?  The search for answers could tarnish both parties."  - USA Today

Democracy for America rolls out two billboards in DeLay's district today which will stay up through May.  The billboards are part of a month-long campaign in which DFA activists submitted suggestions for slogans and voted on their favorite, which turned out to be: "Lobbyists sent Tom DeLay golfing; all you got was this billboard."

The Senate and the judiciary
The Republican National Committee has issued a release reminding Senate Republicans that in the last two election cycles, four in their ranks "ran on judicial nominations -- and won."

The Wall Street Journal looks at how the Senate got to the point at which "closed-door maneuvers within the Judiciary Committee" and "quiet negotiations with the White House" ceased to be options for the minority "for affecting a president's judicial nominations," leaving the filibuster as the only resort.  "The gradual disappearance of other levers of influence is an often overlooked cause of the battle over judicial nominations...  Both parties have played a part."

Roll Call says "House GOP aides are actively working with their Senate counterparts to create a coordinated agenda and message campaign to be implemented during the expected 'nuclear winter' that Democrats have threatened to impose if Frist drops the bomb."  That said, "the House feels it needs more information from Frist on just how and when he plans to" pull the trigger.

The Los Angeles Times reviews the latest round of ads in the filibuster war.

Immigration
"Californians now account for one in eight Americans," says the Los Angeles Times, which also has one demographic expert saying that "California remains a leading destination for foreign immigrants, but not as much as 10 or 15 years ago, when about one-third of all Latino immigrants moved first to California...  Today about one-quarter of Latino immigrants begin their American experience here."

It was expected, but House and Senate negotiators on the war supplemental have agreed to preserve in the final bill the provisions in the House version that would "discourage states from issuing driver's licenses to illegal immigrants, tighten asylum requirements and complete the border fence between California and Mexico...  The driver's license provision would, for the first time, set national standards for the state-issued documents" by requiring "every applicant... to prove legal residency in the United States.  If a state opted not to comply, its driver's licenses, even those issued to citizens and legal residents, would not be recognized as valid for federal identification purposes."  Which is to say, most states are expected to comply.  – Los Angeles Times

The New York Times looks at why the White House has backed the drivers' license measure: “House conservatives have said they will not consider an expanded temporary worker program, a goal of President Bush and business groups, until what they call border security measures are adopted.  Strategists working with the White House say they have accepted the need to accommodate the conservatives to win support for a package of changes in immigration law.”

Governor Huckabee praised Bush's proposed guest-worker plan and criticized REAL ID, saying that drivers' licenses are licenses to drive -- not licenses to work or licenses to citizenship.  He recounted a conversation he had with an unnamed state senator, who was complaining that illegal immigrants were stealing jobs from Arkansas residents.  Huckabee said he asked that state senator to name him one resident whose job was taken by an illegal immigrant.  "He couldn't do it," he said.  Huckabee replied, he said, by telling this senator he was engaged in race-baiting.

Huckabee also talked about how the Arkansas legislature narrowly defeated his proposal to allow the children of illegal immigrants to qualify for in-state college tuition and scholarships.  "Some of it was just embarrassing because it smacked of the racism I thought we were beyond."

"An immigration rights group says the Maryland Motor Vehicle Administration is violating state law by denying driver's licenses to illegal aliens."  The agency "requires documentation -- including a Social Security number -- to verify a person's identity, not the person's immigration status."  Maryland's Republican governor has yet to take a position on licenses for illegal immigrants.  "More than 20 states have laws prohibiting illegal aliens from obtaining driver's licenses."  - Washington Times

And the Washington Post focuses on how big an issue immigration has become in the UK elections: "if there is anything that could alter the eventual margin in an election in which Blair and Labor appear headed for another comfortable majority in Parliament, it is the twin issues of immigration and asylum seekers.  According to every opinion poll, it is one of the top three or four issues... and the only one on which voters trust the Conservatives... far more than they trust Labor."

The UK elections
The widow of a British serviceman killed in Iraq is publicly blaming Blair for her husband's death.  – Times Online

Meanwhile, the Labor Party is campaigning to keep voters from going with Liberal Democrats to protest the war.  The Liberal Democrats are "demanding an end to tactical voting to help Labor."  - Times Online

Conflicting tracking polls, just like in 2004!  The latest Times tracking poll shows that Labor "is down one point compared with yesterday at 41 per cent, with the Tories unchanged on 29 per cent, the Liberal Democrats unchanged on 21 per cent."

And the latest Financial Times survey shows Labor with "a solid 39%-29%-22% lead among those certain to vote," but "claims that 36% of voters may yet change their mind..."  But The Guardian track shows that "Labor's claim to be at greater risk in its key battleground seats than the national opinion polls suggest is true...  Labor's vote share in 108 key seats where it faces a strong Tory challenge is down from 47% in 2001 to 41%.  The Tories have maintained their share of the vote at around 36%, suggesting their strategy of focusing money and personnel on re-winning lost marginals may inflict damage deep within Labor's post-1997 comfort zone."  - The Guardian

USA Today wraps up all the latest polls in its election preview.

The Los Angeles Times focuses more on atmospherics: "For a candidate who is on course to be reelected to a third straight term Thursday and who... is arguably the most successful Labor politician ever, Blair is emerging from a grueling campaign as something of a loser."

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